SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~June 30~~December 31, 2016

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File No. 000-55183

Home Bancorp Wisconsin, Inc.

(Exact name of registrant as specified in its charter)

Maryland	46-3383278
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
3762 East Washington Avenue, Madison, Wisconsin	53704
(Address of Principal Executive Offices)	Zip Code

3762 East Washington Avenue, Madison, Wisconsin	53704
(Address of Principal Executive Offices)	Zip Code

(608) 282-6000

(Registrant’s telephone number)

N/A

(Former name or former address, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☐ (Do not check if smaller reporting company)	Smaller reporting company	☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

There were 899,190 shares of the Registrant’s common stock, par value $0.01 per share issued and outstanding as of ~~August~~February 513, ~~2016~~2017.

Home Bancorp Wisconsin, Inc.

Form 10-Q

Index

		Page
~~Part I. Financial Information~~	Part I. Financial Information
Item 1.	Financial Statements
	Consolidated Balance Sheets as of June 30, 2016 (unaudited) and September 30, 2015	2
	Condensed Consolidated Balance Sheets as of December 31, 2016 (unaudited) and September 30, 2016	2
	Consolidated Statements of Operations for the Three and Nine Months Ended June 30, 2016 and 2015 (unaudited)	3
	Condensed Consolidated Statements of Operations for the Three Months Ended December 31, 2016 and 2015 (unaudited)	3
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended June 30, 2016 and 2015 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended December 31, 2016 and 2015 (unaudited)	4
	Consolidated Statements of Stockholders’ Equity for the Nine Months Ended June 30, 2016 and 2015 (unaudited)	5
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended December 31, 2016 and 2015 (unaudited)	5
	Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2016 and 2015 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2016 and 2015 (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27
Item 4.	Controls and Procedures	2827
~~Part II. Other Information~~	Part II. Other Information
Item 1.	Legal Proceedings	2927
Item 1A.	Risk Factors	2927
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2927
Item 3.	Defaults upon Senior Securities	2927
Item 4.	Mine Safety Disclosures	2927
Item 5.	Other Information	2928
Item 6.	Exhibits	2928

PART I FINANCIAL INFORMATION ~~Item 1. Financial Statements~~

Item 1 Financial Statements

Home Bancorp Wisconsin, Inc. and Subsidiary

Condensed Consolidated Balance Sheets

~~June 30~~December 31, 2016 and September 30, ~~2015~~2016

(Dollars in Thousands)

	(Unaudited) June 30,2016			September 30,2015
	(Unaudited)
	December 31,2016			September 30,2016
Assets
Cash and due from banks	$	12,~~908~~375		$	2,~~222~~788
Interest-bearing deposits		~~3,714~~369			~~311~~377
Cash and cash equivalents		52,~~622~~744			23,~~533~~165
Other interest-bearing deposits		35,~~627~~370			5,~~011~~327
Securities available for sale		1,~~208~~051			21,~~765~~119
Securities held to maturity (fair value of $2,555 and $2,933 for June 30, 2016 and September 30, 2015, respectively)		2,478			2,870
Securities held to maturity (fair value of $2,186 and $2,411 for December 31, 2016 and September 30, 2016, respectively)		2,182			2,340
Loans held for sale		~~201~~1,756			~~151~~1,721
Loans, net of allowance for loan losses of $1,492 and $1,478 for June 30, 2016 and September 30, 2015, respectively.		114,891			109,860
Loans, net of allowance for loan losses of $1,501 and $1,502 for December 31, 2016 and September 30, 2016 respectively.		120,895			116,674
Premises and equipment, net		5,~~227~~137			5,~~212~~176
Foreclosed assets		—			260
Cash value of life insurance		3,412			3,392
Cash value of life insurance		3,371			3,316
Federal Home Loan Bank stock		646			646
Other assets		~~909~~881			~~902~~942
TOTAL ASSETS	$	~~138~~144,~~180~~074		$	~~133~~140,~~526~~502
Liabilities and Stockholders’ Equity
Liabilities:
Demand deposits	$	3335,~~538~~446		$	3034,~~055~~590
Money market and savings deposits		45,~~119~~588			4345,~~105~~354
Time deposits		3233,~~422~~117			32,~~560~~614
Total deposits		~~111~~114,~~079~~151			~~105~~112,~~720~~558
Advance payments by borrowers for taxes and insurance		~~522~~129			~~793~~809
Federal funds purchased		~~895~~659			~~616~~1,330
Borrowed funds		1215,~~317~~228			1312,~~005~~223
Other liabilities		1,~~094~~538			1,~~247~~227
Total liabilities		~~125~~131,~~907~~705			~~121~~128,~~381~~147
Commitments and contingencies (Note 1)
Stockholders’ Equity:
Common stock $0.01 par value, 30,000,000 shares authorized; 899,190 shares issued and outstanding at June 30, 2016 and September 30, 2015	$	9		$	9
Common stock $0.01 par value, 30,000,000 shares authorized; 899,190 shares issued and outstanding at December 31, 2016 and September 30, 2016	$	9		$	9
Additional paid-in capital		7,~~404~~403			7,~~407~~403
Retained earnings		5,~~506~~591			5,~~371~~580
Unearned Employee Stock Ownership Plan (ESOP) shares		(~~647~~633	)		(~~669~~640	)
Accumulated other comprehensive income		1			27
Accumulated other comprehensive income (loss)		(1	)		3
Total stockholders’ equity		12,~~273~~369			12,~~145~~355
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	~~138~~144,~~180~~074		$	~~133~~140,~~526~~502

The accompanying notes are an integral part of these financial statements

Home Bancorp Wisconsin, Inc. and Subsidiary

Condensed Consolidated Statements of Operations

Three ~~and Nine~~ Months Ended ~~June 30~~December 31, 2016 and 2015

(Unaudited)

(Dollars in Thousands~~, except per share data~~)

	Three Months Ended June 30,					Nine Months Ended June 30,
	Three Months Ended December 31,
	2016		2015			~~2016~~		~~2015~~
Interest and dividend income:
Loans, including fees	$	1,~~173~~249	$	1,~~043~~151		$	~~3,520~~	$	~~2,965~~
Interest-bearing deposits		—18		3025			50		94
Securities		2418		4028			76		~~140~~
Total interest and dividend income		1,~~197~~285		1,~~113~~204			~~3,646~~		~~3,199~~
Interest expense:
Deposits		9097		7085			~~262~~		~~201~~
Borrowed funds		7476		5774			~~223~~		~~159~~
Total interest expense		~~164~~173		~~127~~159			~~485~~		~~360~~
Net interest income		1,~~033~~112		~~986~~1,045			~~3,161~~		~~2,839~~
Provision for loan losses		5—		305			15		90
Net interest income after provision for loan losses		1,~~028~~112		~~956~~1,040			~~3,146~~		~~2,749~~
Noninterest income:
Service fees		6770		5173			~~205~~		~~163~~
Mortgage banking income		845		2036			~~168~~		~~115~~
Net gain on sale of securities		2		—			6		8
Increase in cash value of life insurance		20		19
Increase in cash value of life insurance		18		19			55		59
Net gain on sale of premises and equipment		15		15
Net gain on sale of premises and equipment		15		15			46		47
Rental income		24		24
Rental income		24		24			72		74
Other		13		12
Other		17		7			72		25
Total noninterest income		145		179
Total noninterest income		227		136			624		491
Noninterest expense:
Noninterest expense:
Compensation and employee benefits		613		574
Compensation and employee benefits		601		594			1,789		1,787
Occupancy and equipment		174		175
Occupancy and equipment		186		175			561		560
Data processing and office expense		251		224
Data processing and office expense		246		221			704		683
Foreclosed assets, net		—		23
Foreclosed assets, net		—		195			23		262
Advertising and promotions		44		26
Advertising and promotions		33		37			91		96
Professional fees		71		60
Professional fees		76		51			197		110
Examinations and assessments		24		39
Examinations and assessments		27		30			93		98
Other		71		46
Other		66		83			177		218
Total noninterest expense		1,246		1,167
Total noninterest expense		1,235		1,386			3,635		3,814
Income before income taxes		11		52
Income (loss) before income taxes		20		(294	)		135		(574	)
Provision for income taxes		—		—
Provision for income taxes		—		—			—		—
Net income	$	11	$	52
Net income (loss)	$	20	$	(294	)	$	135	$	(574	)
Earnings per share:
Earnings per share:
Basic		.01		.06
Basic		.02		(.35	)		.16		(.69	)
Diluted		.01		.06
Dilutive		.02		(.35	)		.16		(.69	)

The accompanying notes are an integral part of these financial statements

Home Bancorp Wisconsin, Inc. and Subsidiary

Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~

Three ~~and Nine~~ Months Ended ~~June~~December 3031, 2016 and 2015

(Unaudited)

(Dollars in Thousands)

	Three Months Ended June 30,						Nine Months Ended June 30,
	Three Months Ended December 31,
	2016			2015			~~2016~~			~~2015~~
Net income (loss)	$	20		$	(294	)	$	135		$	(574	)
Net income	$	11		$	52
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities during the year		(3	)		(10	)		(20	)		44
Unrealized gain (loss) on securities		(4	)		(31	)
Reclassification adjustment for gains realized in net income		(2	)		—			(6	)		(8	)
Reclassification adjustment for (gains) losses realized in net loss		—			—
Income tax effect		—			—			—			—
Net unrealized gain (loss) on securities		(54	)		(1031	)		~~(26~~	)		36
Other comprehensive income (loss), net of tax		(54	)		(1031	)		~~(26~~	)		36
Comprehensive income (loss)	$	15		$	(304	)	$	109		$	(538	)
Comprehensive income	$	7		$	21

The accompanying notes are an integral part of these financial statements

Home Bancorp Wisconsin, Inc. and Subsidiary

Condensed Consolidated Statements of Stockholders’ Equity

~~Nine~~Three Months Ended ~~June 30~~December 31, 2016 and 2015

(Unaudited)

(Dollars in Thousands)

	CommonStock		AdditionalPaid InCapital			RetainedEarnings			UnearnedESOPShares			AccumulatedOtherComprehensiveIncome (Loss)			TotalStockholders’Equity
Balance at October 1, 2014	$	9	$	7,413		$	6,050		$	(698	)	$	(8	)	$	12,766
Net loss		—		—			(574	)		—			—			(574	)
Allocation of 2,158 Shares from ESOP		—		(5	)		—			22			—			17
Other comprehensive income		—		—			—			—			36			36
Balance at June 30, 2015	$	9	$	7,408		$	5,476		$	(676	)	$	28		$	12,245
Balance at October 1, 2015	$	9	$	7,407		$	5,371		$	(669	)	$	27		$	12,145
Net income		—		—			~~135~~52			—			—			~~135~~52
Allocation of 2,158 Shares from ESOP		—		(3	)		—			22			—			19
Allocation of 719 Shares from ESOP		—		(1	)		—			7			—			6
Other comprehensive loss		—		—			—			—			(2631	)		(2631	)
Balance at June 30, 2016	$	9	$	7,404		$	5,506		$	(647	)	$	1		$	12,273
Balance at December 31, 2015	$	9	$	7,406		$	5,423		$	(662	)	$	(4	)	$	12,172
Balance at October 1, 2016	$	9	$	7,403		$	5,580		$	(640	)	$	3		$	12,355
Net income		—		—			11			—			—			11
Allocation of 719 Shares from ESOP		—		—			—			7			—			7
Other comprehensive loss		—		—			—			—			(4	)		(4	)
Balance at December 31, 2016	$	9	$	7,403		$	5,591		$	(633	)	$	(1	)	$	12,369

The accompanying notes are an integral part of these financial statements

Home Bancorp Wisconsin, Inc. and Subsidiary

Condensed Consolidated Statements of Cash Flows

~~Nine~~Three Months Ended ~~June 30~~December 31, 2016 and 2015

(Unaudited)

(Dollars in Thousands)

	Nine Months Ended June 30,
	Three Months Ended December 31,
	2016			2015
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
Net income (loss)	$	135		$	(574	)
Net income	$	11		$	52
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		~~178~~61			~~189~~58
Net amortization of premiums and discounts		153			265
ESOP compensation expense		197			176
Provision for loan losses		15—			905
Net gain on sale of securities		(6	)		(8	)
Gain on sale of premises and equipment		(15	)		(15	)
Gain on sale of premises and equipment		(46	)		(47	)
Net loss on foreclosed assets		—			23
Net loss on foreclosed assets		23			242
Increase in cash surrender value		(20	)		(19	)
Increase in cash surrender value		(55	)		(59	)
Changes in operating assets and liabilities:
Loans held for sale		(5035	)		~~270~~(1,034	)
Other assets		(760	)		~~(158~~68	)
Other liabilities		~~(107~~326	)		~~174~~579
Total adjustments		~~(21~~387	)		~~736~~(324	)
Net cash provided by operating activities		114			162
Net cash (used in) provided by operating activities		398			(272	)
Cash flows from investing activities:
Net decrease in other interest-bearing deposits		1,384			1,490
Net increase in other interest-bearing deposits		(43	)		—
Proceeds from sales of securities available for sale		~~1,208~~—			~~836~~—
Proceeds from maturities, prepayments, and calls of securities available for sale		~~317~~63			~~2,696~~93
Proceeds from maturities, prepayments, and calls of securities held to maturity		~~389~~157			~~377~~140
Net (increase) decrease in loans		(5,046	)		(16,398	)
Net increase in loans		(4,221	)		(2,642	)
Proceeds from sale of foreclosed assets		~~237~~—			~~483~~237
Capital expenditures		(~~193~~22	)		(3567	)
Net cash used in investing activities		(14,~~704~~066	)		(102,~~551~~239	)
Cash flows from financing activities:
Net increase in deposits		51,~~359~~593			75,~~395~~781
Net decrease in advance payments by borrowers for taxes and insurance		(~~271~~680	)		(~~282~~406	)
Net increase (decrease) in federal funds purchased		279			(1,388	)
Net decrease in federal funds purchased		(671	)		(99	)
Proceeds from borrowings		43,~~000~~100			~~8,900~~—
Repayments of borrowed funds		(~~4,688~~95	)		(~~5,023~~45	)
Net cash provided by financing activities		43,~~679~~247			95,~~602~~231
Net increase (decrease) in cash and cash equivalents		~~3,089~~(421	)		~~(787~~2,720	)
Cash and cash equivalents at beginning		23,~~533~~165			42,~~047~~533
Cash and cash equivalents at end	$	52,~~622~~744		$	35,~~260~~253
Supplemental cash flow information:
Cash paid for interest	$	~~481~~174		$	~~367~~157
Noncash operating and investing activities:
Loans transferred to foreclosed assets	$	—		$	239

The accompanying notes are an integral part of these financial statements

Home Bancorp Wisconsin, Inc. and Subsidiary ~~Form 10-Q Notes to Consolidated Financial Statements (Unaudited) (Dollars in Thousands, except per share data) Home Bancorp Wisconsin, Inc. and Subsidiary Notes to Financial Statements~~

Form 10-Q

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollars in Thousands, except per share data)

Note 1

Basis of Financial Statement Presentation

The accompanying consolidated financial statements include the accounts of Home Bancorp Wisconsin, Inc. and its wholly-owned subsidiary, Home Savings Bank, the “Bank,” and collectively, (the “Company”).

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial reporting and with instructions for Form 10-Q and Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the period. Actual results could differ from these estimates.

In the opinion of management, the consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the financial condition of the Company as of ~~June 30~~December 31, 2016 and September 30, ~~2015~~2016, and the results of its operations, ~~and~~ comprehensive income ~~(loss) for the three and nine months ended June 30~~, ~~2016~~ and ~~2015, and~~ the statements of stockholders’ equity, and cash flows for the ~~nine~~three months ended ~~June 30~~December 31, 2016 and 2015. These financial statements should be read in conjunction with the financial statements of the Company for the year ended September 30, ~~2015~~2016 included as part of Home Bancorp Wisconsin, Inc.’s ~~Form~~ 10-K dated December 2328, ~~2015~~2016 as filed with the Securities and Exchange Commission.

The results of operations for the three ~~and nine~~ month ~~periods~~period ended ~~June 30~~December 31, 2016 are not necessarily indicative of the results that may be expected for the entire year. For further information, refer to the financial statements and footnotes thereto in the Annual Report on Form 10-K.

Note 2

New Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13 “Credit Losses (Topic 326).” ASU 2016-13 requires organizations to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. ~~For~~The ~~Securities and Exchange Commission (SEC) filers, the~~ new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption will be permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently assessing the impact of adopting ASU 2016-13 on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09 “Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting.” ASU 2016-09 requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. It also allows an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and to make a policy election for forfeitures as they occur. The guidance is effective for public business entities for fiscal years beginning after December 15, ~~2016~~2017, and interim periods within those years. Early adoption is permitted. The Company is currently assessing the impact of adopting ASU 2016-09 on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842).” ASU 2016-02 establishes a right of use model that requires a lessee to record a right of use asset and a lease liability for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing. If the lessor doesn’t convey risks and rewards or control, an operating lease results. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business entities. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, with certain practical expedients available. Early adoption is permitted. The Company is currently assessing the impact of adopting ASU 2016-02 on its consolidated financial statements.

In January 2016, FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The new standard makes a number of changes to the recognition and measurement standards of financial instruments, including the following changes: 1) equity securities with a readily determinable fair value will have to be measured at fair value with changes in fair value recognized in net income; 2) entities that are public business entities will no longer be required to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost; and 3) entities that are public business entities will be required to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. This new standard is effective for consolidated financial statements issued for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this new standard is not expected to have a material impact on our financial condition or results of operations, except that the Company will no longer disclose the method(s) and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost.

In April 2015, FASB issued ASU No. 2015-03, Interest-Imputation of Interest (subtopic 835-30): Simplify the Presentation of Debt Issuance Costs. The primary purpose of this new guidance is to present debt issuance costs as a direct deduction from the carrying amount of the debt liability. This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The Company adopted this guidance for the December 31, 2015 reporting period. Adoption of this standard did not have a significant impact on the consolidated financial statements or the Notes thereto.

In May 2014, FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The amendment supersedes and replaces nearly all existing revenue recognition guidance. Under the amended guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for annual and interim periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. In August 2015, FASB issued ASU No. 2015-14 Revenue from Contracts with Customer (Topic 606), Deferral of the Effective Date. The amendment defers the effective date of ASU No. 2014-09 by one year. Adoption of ASU No. 2014-04 and ASU 2015-14 is not expected to have a material impact on the consolidated financial statements, but significant disclosures to the Notes thereto will be required.

Note 3

Earnings Per Share

Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period, including allocated and committed-to-be-released ESOP shares, during the applicable period. Diluted earnings per share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method.

The following table presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share: for the quarters ended December 31, 2016 and 2015:

	Three MonthsEnded June 30,2016			Three MonthsEnded June 30,2015			Nine MonthsEnded June 30,2016			Nine MonthsEnded June 30,2015
	2016			2015
Net income (loss)	$	2011		$	~~(294~~52	)	$	~~135~~		$	~~(574~~	)
Basic potential common shares:
Weighted average shares outstanding		899,190			899,190			~~899,190~~			~~899,190~~
Weighted average unallocated Employee Stock Ownership Plan shares		(6563,~~101~~663	)		(6766,~~979~~540	)		~~(65,820~~	)		~~(68,698~~	)
Basic weighted average shares outstanding		~~834~~835,~~089~~527			~~831~~832,~~211~~650			~~833,370~~			~~830,492~~
Dilutive potential common shares		—			—			—			—
Dilutive weighted average shares outstanding		~~834~~835,~~089~~527			~~831~~832,~~211~~650			~~833,370~~			~~830,492~~
Basic earnings per share	$	.0201		$	(.3506	)	$	~~.16~~		$	~~(.69~~	)
Diluted earnings per share	$	.0201		$	(.3506	)	$	~~.16~~		$	~~(.69~~	)

Note 4

Securities

The amortized cost and estimated fair value of securities with gross unrealized gains and losses are as follows:

	AmortizedCost		GrossUnrealizedGains		GrossUnrealizedLosses			EstimatedFair Value
June 30, 2016
December 31, 2016
Securities available for sale:
U.S. agency pass-through	$	1,~~207~~052	$	42	$	(3	)	$	1,~~208~~051
Securities held to maturity:
U.S. agency pass-through	$	2,~~478~~182	$	777	$	—3		$	2,~~555~~186
September 30, 2015
September 30, 2016
Securities available for sale:
U.S. agency pass-through	$	21,~~738~~116	$	275	$	—2		$	~~2,765~~1.119
Securities held to maturity:
U.S. agency pass-through	$	2,~~870~~340	$	6371	$	—		$	2,~~933~~411

Fair values of securities are estimated based on financial models or prices paid for similar securities. It is possible interest rates could change considerably, resulting in a material change in the estimated fair value. At June 30, 2016, three U.S. agency pass-through securities available for sale with fair values totaling $568 were in an unrealized loss position totaling $3. These securities have been in an unrealized loss position for less than 12 months. The fair values are expected to recover as the securities approach their maturity dates. The Company does not believe the securities are impaired due to reasons of credit quality.

Note 5

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff, generally are generally reported at their outstanding unpaid principal balances adjusted for charge-offs and the allowance for loan losses. Interest on loans is accrued and credited to income based on the unpaid principal balance. Loan-origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.

The accrual of interest on loans is discontinued when, in the opinion of management, there is an indication the borrower may be unable to make payments as they become due. When loans are placed on nonaccrual or charged off, all unpaid accrued interest is reversed against interest income. The interest on these loans is subsequently accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Loan Losses

The allowance for loan losses is maintained at the level considered adequate by management to provide for losses that are probable. The allowance for loan losses is established through a provision for loan losses charged to expense as losses are estimated to have occurred. Loan losses are charged against the allowance when management believes that the collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance.

910

Management regularly evaluates the allowance for loan losses using the Company’s past loan loss experience, known and inherent risks in the portfolio, composition of the portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, current economic conditions, and other relevant factors. This evaluation is inherently subjective since it requires material estimates that may be susceptible to significant change.

A loan is impaired when, based on current information, it is probable that the Bank will not collect all amounts due in accordance with the contractual terms of the loan agreement. Management determines whether a loan is impaired on a case-by-case basis, taking into consideration the payment status, collateral value, length and reason of any payment delays, the borrower’s prior payment record, and any other relevant factors. Large groups of smaller-balance homogeneous loans, such as residential mortgage and consumer loans, are collectively evaluated in the allowance for loan losses analysis and are not subject to impairment analysis unless such loans have been subject to a restructuring agreement. Specific allowances for impaired loans are based on discounted cash flows of expected future payments using the loan’s initial effective interest rate or the fair value of the collateral if the loan is collateral dependent.

In addition, various regulatory agencies periodically review the allowance for loan losses. These agencies may require additions to the allowance for loan losses based on their judgments of collectability.

The following table presents total loans by portfolio segment and class of loan as of ~~June 30~~December 31, 2016 and September 30, ~~2015~~2016:

	June 30,2016			September 30,2015
	December 31,2016			September 30,2016
Commercial:
Commercial business	$	1,~~913~~272		$	21,~~182~~138
Commercial real estate		1920,~~402~~343			1920,~~595~~845
Multifamily real estate		2930,~~532~~780			2528,~~224~~196
Construction		45,~~051~~141			54,~~179~~789
Residential real estate:
One- to four-family residential		5054,~~364~~514			4853,~~284~~145
Second mortgage		98,~~395~~556			98,~~668~~582
Consumer		2,~~232~~287			2,~~311~~258
Subtotals		~~116~~122,~~889~~893			~~112~~118,~~443~~953
Allowance for loan losses		(1,~~492~~501	)		(1,~~478~~502	)
Net deferred loan expenses		(72	)		(51	)
Net deferred loan fees		(97	)		(91	)
Undisbursed loan proceeds		(~~434~~400	)		(~~1,054~~686	)
Loans, net	$	~~114~~120,~~891~~895		$	~~109~~116,~~860~~674

Analysis of the allowance for loan losses for the three and nine months ended June 30, 2016 and 2015 follows:

	Commercial			Residential			Consumer			Totals
Three Months Ended
Balance at March 31, 2015	$	916		$	507		$	28		$	1,451
Provision for loan losses		19			8			3			30
Loans charged off		—			(21	)		—			(21	)
Recoveries of loans previously charged off		—			1			1			2
Balance at June 30, 2015	$	935		$	495		$	32		$	1,462
Balance at March 31, 2016	$	862		$	599		$	26		$	1,487
Provision for loan losses		(3	)		10			(2	)		5
Loans charged off		—			—			(1	)		(1	)
Recoveries of loans previously charged off		—			—			1			1
Balance at June 30, 2016	$	859		$	609		$	24		$	1,492

	Commercial			Residential			Consumer			Totals
Nine Months Ended
Balance at September 30, 2014	$	877		$	504		$	22		$	1,403
Provision for loan losses		58			11			21			90
Loans charged off		—			(21	)		(15	)		(36	)
Recoveries of loans previously charged off		—			1			4			5
Balance at June 30, 2015	$	935		$	495		$	32		$	1,462
Balance at September 30, 2015	$	930		$	522		$	26		$	1,478
Provision for loan losses		(71	)		87			(1	)		15
Loans charged off		—			—			(5	)		(5	)
Recoveries of loans previously charged off		—			—			4			4
Balance at June 30, 2016	$	859		$	609		$	24		$	1,492

	Commercial		Residential		Consumer		Totals
Allowance for loan losses at June 30, 2016:
Individually evaluated for impairment	$	165	$	27	$	—	$	192
Collectively evaluated for impairment		694		582		24		1,300
Totals	$	859	$	609	$	24	$	1,492
Allowance for loan losses at September 30, 2015:
Individually evaluated for impairment	$	142	$	34	$	—	$	176
Collectively evaluated for impairment		788		488		26		1,302
Totals	$	930	$	522	$	26	$	1,478

Analysis of loans evaluated for impairment as of June 30, 2016 and September 30, 2015, follows:

	Commercial		Residential		Consumer		Totals
Loans at June 30, 2016:
Individually evaluated for impairment	$	803	$	777	$	—	$	1.580
Collectively evaluated for impairment		54,095		58,982		2,232		115,309
Totals	$	54,898	$	59,759	$	2,232	$	116,889
Loans at September 30, 2015:
Individually evaluated for impairment	$	847	$	845	$	—	$	1,692
Collectively evaluated for impairment		51,333		57,107		2,311		110,751
Totals	$	52,180	$	57,952	$	2,311	$	112,443

~~Information~~Analysis ~~regarding~~of ~~impaired~~the ~~loans~~allowance asfor ofloan ~~June~~losses 30for the three months ended December 31, 2016, and 2015 follows:

	RecordedInvestment			PrincipalBalance		RelatedAllowance			AverageInvestment			InterestRecognized
	Commercial			Residential		Consumer			Totals
Loans with no related allowance for loan losses:
Balance at September 30, 2015	$	930		$	522	$	26		$	1,478
Commercial real estate	$	491		$	491		N/A		$	511		$	23
Provision for loan losses		(72	)		75		2			5
One-to four-family		609			609		N/A			615			23
Loans charged off		—			—		(3	)		(3	)
Totals		1,100			1,100		N/A			1,126			46
Recoveries of loans previously charged off		—			—		2			2
Loans with an allowance for loan losses:
Balance at December 31, 2015	$	858		$	597	$	27		$	1,482
Commercial business		236			236		161			238			5
Balance at September 30, 2016	$	937		$	550	$	15		$	1,502
Construction		76			76		4			76			3
Provision for loan losses		(17	)		16		1			—
One-to four-family		168			168		27			168			3
Loans charged off		—			—		(1	)		—
Totals		480			480		192			482			11
Recoveries of loans previously charged off		—			—		—			—
Grand totals	$	1,580		$	1,580	$	192		$	1,608		$	57
Balance at December 31, 2016	$	920		$	566	$	15		$	1,501
Allowance for loan losses at December 31, 2016:
Individually evaluated for impairment	$	264		$	23	$	—		$	287
Collectively evaluated for impairment		656			543		15			1,214
Totals	$	920		$	566	$	15		$	1,501
Allowance for loan losses at September 30, 2016:
Individually evaluated for impairment	$	342		$	21	$	—		$	363
Collectively evaluated for impairment		595			529		15			1,139
Totals	$	937		$	550	$	15		$	1,502

~~Information~~Analysis ~~regarding~~of ~~impaired~~ loans evaluated for impairment as of December 31, 2016 and September 30, ~~2015~~2016, follows:

	RecordedInvestment		PrincipalBalance		RelatedAllowance		AverageInvestment		InterestRecognized
	Commercial		Residential		Consumer		Totals
Loans with no related allowance for loan losses:
Loans at December 31, 2016:
Commercial business	$	80	$	800		N/A	$	81	$	—
Individually evaluated for impairment	$	1,696	$	651	$	—	$	2,347
Commercial real estate		532		5322		N/A		553		33
Collectively evaluated for impairment		55,840		62,419		2,287		120,546
One-to four-family		473		4733		N/A		470		30
Totals	$	57,536	$	63,070	$	2,287	$	122,893
Totals		1,085		1,0855		N/A		1,104		63
Loans at September 30, 2016:
Loans with an allowance for loan losses:
Individually evaluated for impairment	$	1,801	$	653	$	—	$	2,454
Commercial business		158		158		129		159		—
Collectively evaluated for impairment		53,167		61,074		2,258		116,499
Construction		77		77		13		77		4
Totals	$	54,968	$	61,727	$	2,258	$	118,953
One-to four-family		372		372		34		375		22
Totals		607		607		176		611		26
Grand totals	$	1,692	$	1,692	$	176	$	1,715	$	89

Information regarding impaired loans as of December 31, 2016, follows:

	Recorded Investment		Principal Balance		Related Allowance		Average Investment		Interest Recognized

Loans with no related allowance for loan losses:
Commercial real estate	$	462	$	462		N/A	$	470	$	7
One-to four-family		483		483		N/A		484		4

Totals		945		945		N/A		954		11

Loans with an allowance for loan losses:
Commercial business		204		204		172		204		2
Commercial real estate		955		955		88		959		14
Construction		75		75		4		75		1
One-to four-family		168		168		23		168		1

Totals		1,402		1,402		287		1,406		18

Grand totals	$	2,347	$	2,347	$	287	$	2,360	$	29

Information regarding impaired loans as of September 30, 2016, follows:

	Recorded Investment		Principal Balance		Related Allowance		Average Investment		Interest Recognized

Loans with no related allowance for loan losses:
Commercial real estate	$	477	$	4770		N/A	$	504	$	30
One-to four-family		485		4853		N/A		489		21

Totals		962		9625		N/A		993		51

Loans with an allowance for loan losses:
Commercial and industrial		285		285		247		287		9
Commercial real estate		964		964		91		980		60
Construction		75		75		4		76		4
One-to four-family		168		168		21		168		5

Totals		1,492		1,492		363		1,511		78

Grand totals	$	2,454	$	2,454	$	363	$	1,715	$	129

No additional funds are committed to be advanced in connection with impaired loans.

The Company regularly evaluates various attributes of loans to determine the appropriateness of the allowance for loan losses. The credit quality indicators monitored differ depending on the class of loan.

Commercial loans are generally evaluated using the following internally prepared ratings:

“Pass” ratings are assigned to loans with adequate collateral and debt service ability such that collectability of the contractual loan payments is highly probable.

“Special mention/watch” ratings are assigned to loans where management has some concern that the collateral or debt service ability may not be adequate, though the collectability of the contractual loan payments is still probable.

“Substandard” ratings are assigned to loans that do not have adequate collateral and/or debt service ability such that collectability of the contractual loan payments is no longer probable.

“Doubtful” ratings are assigned to loans that do not have adequate collateral and/or debt service ability, and collectability of the contractual loan payments is unlikely.

Residential real estate and consumer loans are generally evaluated based on whether or not the loan is performing according to the contractual terms of the loan.

Information regarding the credit quality indicators most closely monitored for commercial loans by class as of June 30, 2016 and September 30, 2015, follows:

	Pass		SpecialMention/Watch		Substandard		Doubtful		Totals
June 30, 2016
Commercial business	$	1,677	$	—	$	236	$	—	$	1,913
Commercial real estate		17,939		972		491		—		19,402
Multifamily real estate		29,312		220		—		—		29,532
Construction		3,976		75		—		—		4,051
Totals	$	52,904	$	1,267	$	727	$	—	$	54,898
September 30, 2015
Commercial business	$	1,944	$	—	$	238	$	—	$	2,182
Commercial real estate		17,990		1,073		532		—		19,595
Multifamily real estate		25,002		222		—		—		25,224
Construction		5,103		76		—		—		5,179
Totals	$	50,039	$	1,371	$	770	$	—	$	52,180

Information regarding the credit quality indicators most closely monitored for residential real estate and consumer loans by class as of June 30, 2016 and September 30, 2015, follows:

	Performing		Non-performing		Totals
June 30, 2016
One- to four-family	$	50,233	$	131	$	50,364
Second mortgage		9,371		24		9,395
Consumer		2,232		—		2,232
Totals	$	61,836	$	155	$	61,991
September 30, 2015
One- to four-family	$	48,284	$	—	$	48,284
Second mortgage		9,652		16		9,668
Consumer		2,303		8		2,311
Totals	$	60,239	$	24	$	60,263

~~Loan~~Residential ~~aging~~real ~~information~~estate asand ofconsumer ~~June~~loans ~~30,~~are ~~2016,~~generally ~~follows:~~evaluated based on whether or not the loan is performing according to the contractual terms of the loan.

	Loans PastDue 30-89Days		Loans PastDue 90+Days		Total PastDue Loans
Commercial business	$	—	$	80	$	80
Commercial real estate		—		—		—
Construction		—		—		—
One- to four-family		440		131		571
Second mortgage		—		25		25
Consumer		—		—		—
Totals	$	440	$	236	$	676

Information regarding the credit quality indicators most closely monitored for commercial loans by class as of December 31, 2016 and September 30, 2016, follows:

	Total PastDue Loans		Total CurrentLoans		Total Loans		Loans 90+Days PastDue andAccruingInterest		TotalNonaccrualLoans
	Pass		SpecialMention/Watch		Substandard		Doubtful		Totals
Commercial business	$	80	$	1,833	$	1,913	$	—	$	80
December 31, 2016
Commercial real estate		—		19,402		19,402		—		—
Commercial business	$	1,068	$	—	$	204	$	—	$	1,272
Multifamily real estate		—		29,532		29,532		—		—
Commercial real estate		18,925		---		1,418		—		20,343
Construction		—		4,051		4,051		—		—
Multifamily real estate		30,562		218		—		—		30,780
One- to four-family		571		49,793		50,364		—		131
Construction		5,066		75		—		—		5,141
Second mortgage		25		9,370		9,395		—		25
Totals	$	55,621	$	293	$	1,622	$	—	$	57,536
Consumer		—		2,232		2,232		—		—
September 30, 2016
Totals	$	676	$	116,213	$	116,889	$	—	$	236
Commercial business	$	853	$	---	$	285	$	—	$	1,138
Commercial real estate		19.405		---		1,440		—		20,845
Multifamily real estate		27,977		219		—		—		28,196
Construction		4,714		75		—		—		4,789
Totals	$	52,949	$	294	$	1,725	$	—	$	54,968

~~Loan~~Information ~~aging~~regarding ~~information~~the credit quality indicators most closely monitored for residential real estate and consumer loans by class as of December 31, 2016 and September 30, ~~2015~~2016, follows:

	Loans PastDue 30-89Days		Loans PastDue 90+ Days		Total PastDue Loans
	Performing		Non-performing		Totals
Commercial business	$	—	$	80	$	80
December 31, 2016
Commercial real estate		—		62		62
One- to four-family	$	54,220	$	294	$	54,514
Multifamily real estate		—		—		—
Second mortgage		8,540		16		8,556
Construction		—		—		—
Consumer		2,276		11		2,287
One- to four-family		487		—		487
Totals	$	65,036	$	321	$	65,357
Second mortgage		46		16		62
September 30, 2016
Consumer		3		8		11
One- to four-family	$	52,967	$	178	$	53,145
Totals	$	536	$	166	$	702
Second mortgage		9,566		16		8,582
Consumer		2,258		---		2,258
Totals	$	63,791	$	194	$	63,985

	Total PastDue Loans		Total CurrentLoans		Total Loans		Loans 90+Days Past Dueand AccruingInterest		TotalNonaccrualLoans
Commercial business	$	80	$	2,102	$	2,182	$	—	$	80
Commercial real estate		62		19,533		19,595		—		62
Multifamily real estate		—		25,224		25,224		—		—
Construction		—		5,179		5,179		—		—
One- to four-family		487		47,797		48,284		—		—
Second mortgage		62		9,606		9,668		—		16
Consumer		11		2,300		2,311		—		8
Totals	$	702	$	111,741	$	112,443	$	—	$	166

~~When,~~Loan ~~for~~aging ~~economic~~information ~~or legal reasons related to the borrower’s financial difficulties, the Company grants a concession to the borrower that the Company would not otherwise consider, the modified loan is classified~~ as ~~a troubled debt restructuring. Loan modifications may consist~~ of ~~forgiveness of interest and/or principal~~December 31, ~~a reduction of the interest rate~~2016, ~~interest-only~~follows: ~~payments for a period of time, and/or extending amortization terms. No new troubled debt restructuring was entered into during the nine months ended June 30, 2016.~~

During the year ended and as of September 30, 2015, there were three new troubled debt restructurings, $262 on two one-to-four family residential real estate loans and $159 on one commercial business loan.

	Loans Past Due 30-89 Days		Loans Past Due 90+ Days		Total Past Due Loans

Commercial business	$	8	$	49	$	57
One- to four-family		672		294		966
Second mortgage		134		16		150
Consumer		6		11		17

Totals	$	820	$	370	$	1,190

No troubled debt restructurings defaulted within 12 months of their modification date during the nine months ended June 30, 2016 and one troubled debt restructuring was past due more than 30 days within 12 months of its modification date during the year ended September 30, 2015.

	Total Past Due Loans		Total Current Loans		Total Loans		Loans 90+ Days Past Due and Accruing Interest		Total Nonaccrual Loans

Commercial business	$	57	$	1,215	$	1,272	$	—	$	49
Commercial real estate		—		20,343		20,343		—		—
Multifamily real estate		—		30,780		30,780		—		—
Construction		—		5,141		5,141		—		—
One- to four-family		966		53,548		54,514		—		294
Second mortgage		150		8,406		8,556		—		16
Consumer		17		2,270		2,287		—		11

Totals	$	1,190	$	121,703	$	122,893	$	—	$	370

Loan aging information as of September 30, 2016, follows:

	Loans Past Due 30-89 Days		Loans Past Due 90+ Days		Total Past Due Loans

Commercial and industrial	$	—	$	130	$	130
One- to four-family		546		178		724
Home equity loans and lines of credit		45		16		61
Consumer		7		---		7

Totals	$	598	$	324	$	922

	Total Past Due Loans		Total Current Loans		Total Loans		Loans 90+ Days Past Due and Accruing Interest		Total Nonaccrual Loans

Commercial and industrial	$	130	$	1,008	$	1,138	$	—	$	130
Commercial real estate		---		20,845		20,845		—		---
Multifamily real estate		---		28,196		28,196		—		---
Construction		---		4.789		4,789		—		---
One- to four-family		724		52,421		53,145		—		178
Home equity loans and lines of credit		61		8,521		8,582		—		16
Consumer		7		2,251		2,258		—		---

Totals	$	922	$	118,031	$	118,953	$	—	$	324

When, for economic or legal reasons related to the borrower’s financial difficulties, the Company grants a concession to the borrower that the Company would not otherwise consider, the modified loan is classified as a troubled debt restructuring. Loan modifications may consist of forgiveness of interest and/or principal, a reduction of the interest rate, interest-only payments for a period of time, and/or extending amortization terms.

During the quarter ended and as of December 31, 2016, and the year ended September 30, 2016, there were no new troubled debt restructurings.

No troubled debt restructurings defaulted within 12 months of their modification date during the three months ended December 31, 2016 or the year ended September 30, 2016.

Note 6

Regulatory Capital Ratios

The Bank is subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Federal and state banking agencies have adopted regulations that substantially amend the capital regulations currently applicable to us. The regulations implement the Basel III regulatory capital reforms and changes required by the Dodd-Frank Act.

Effective January 1, 2015 (with some changes transitioned into full effectiveness over two to four years), the Bank became subject to new capital requirements adopted by the FDIC. These new requirements create a new required ratio for common equity tier 1 capital, increase the leverage and tier 1 capital ratios, change the risk weight of certain assets for purposes of the risk-based capital ratios, create an additional capital conservation buffer over the required capital ratios and change what qualifies as capital for purposes of meeting these various capital requirements. Beginning in 2016, failure to maintain the required capital conservation buffer will limit the ability of the Bank to pay dividends, repurchase shares or pay discretionary bonuses. The Company is exempt from consolidated capital requirements as those requirements do not apply to certain small savings bank holding companies with assets under $1 billion.

Under the new capital regulations, the minimum capital ratios are: (1) common equity tier 1 q capital ratio of 4.5% of risk-weighted assets, (2) a tier 1 capital ratio of 6.0% of risk-weighted assets, (3) a total capital ratio of 8.0% of risk-weighted assets, and (4) a tier 1 capital to average assets ratio of 4.0%. Common equity tier 1 capital generally consists of common stock and retained earnings, subject to applicable regulatory adjustments and deductions.

The new requirements also include changes in the risk-weights of assets to better reflect credit risk and other risk exposures. These include a 150% risk weight (increased from 100%) for certain high volatility commercial real estate acquisition, development and construction loans and for non-residential mortgage loans that are 90 days past due or otherwise in non-accrual status; a 20% (increased from 0%) credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable; a 250% risk weight (increased from 100%) for mortgage servicing and deferred tax assets that are not deducted from capital; and increased risk weights (0% to 600%) for equity exposures.

In addition to the minimum common equity tier 1, tier 1 and total capital ratios, the Bank will have to maintain a capital conservation buffer consisting of additional common equity tier 1 capital greater than 2.5% to risk weighted assets above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions. This new capital conservation buffer requirement will bestart being phased in beginning in January 2016 at 0.625% of risk-weighted assets and increasing each year until fully implemented in January 2019.

The FDIC’s prompt corrective action standards also changed effective January 1, 2015. Under the new standards, in order to be considered well-capitalized, the Bank must have a common equity tier 1 ratio of 6.5% (new), a tier 1 ratio of 8.0% (increased from 6.0%), a total risk-based capital ratio of 10.0% (unchanged) and a leverage ratio of 5.0% (unchanged). The Bank meets all these new requirements, including the full capital conservation buffer.

15At December 31, 2016 and September 30, 2016, the Bank was well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since December 31, 2016, that management believes have changed the Bank’s category.

At June 30, 2016 and September 30, 2015, the Bank was well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since June 30, 2016 that management believes have changed the Bank’s category.

The Bank’s actual capital amounts and ratios as of June 30, 2016 and September 30, 2015 are presented in the following table:

	Actual					For CapitalAdequacy Purposes						To Be Well CapitalizedUnder PromptCorrective ActionProvisions
	Amount		Ratio			Amount			Ratio			Amount			Ratio
June 30, 2016
Total capital (to risk-weighted assets)	$	12,542		12.5	% >	$	8,054	>		8.0	% >	$	10,068	>		10.0	%
Tier I capital (to risk-weighted assets)		11,282		11.2	% >		6,041	>		6.0	% >		8,054	>		8.0	%
Common equity tier 1 capital (to risk-weighted assets)		11,282		11.2	% >		4,530	>		4.5	% >		6,544	>		6.5	%
Tier I capital (to average assets)		11,282		8.3	% >		5,458	>		4.0	% >		6,822	>		5.0	%
September 30, 2015
Total capital (to risk-weighted assets)	$	12,277		13.5	% >	$	7,275	>		8.0	% >	$	9,094	>		10.0	%
Tier I capital (to risk-weighted assets)		11,136		12.2	% >		5,456	>		6.0	% >		7,275	>		8.0	%
Common equity tier 1 capital (to risk-weighted assets)		11,136		12.2	% >		4,092	>		4.5	% >		5,911	>		6.5	%
Tier I capital (to average assets)		11,136		8.3	% >		5,357	>		4.0	% >		6,697	>		5.0	%

The Bank’s actual capital amounts and ratios as of December 31, 2016 and September 30, 2016 are presented in the following table:

	Actual					For Capital Adequacy Purposes						To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount			Ratio			Amount			Ratio

December 31, 2016

Total capital (to risk-weighted assets)	$	12,566		13.2	% >	$	7,6122	>		8.0	% >	$	9,515	>		10.0	%
Tier I capital (to risk-weighted assets)		11,371		12.0	% >		5,709	>		6.0	% >		7,612	>		8.0	%
Common equity tier 1 capital (to risk-weighted assets)		11,371		12.0	% >		4,282	>		4.5	% >		6,184	>		6.5	%
Tier I capital (to average assets)		11,371		8.1	% >		5,644	>		4.0	% >		7,055	>		5.0	%

September 30, 2016

Total capital (to risk-weighted assets)	$	12,587		12.8	% >	$	7,849	>		8.0	% >	$	9,811	>		10.0	%
Tier I capital (to risk-weighted assets)		11,357		11.6	% >		5,887	>		6.0	% >		7,849	>		8.0	%
Common equity tier 1 capital (to risk-weighted assets)		11,357		11.6	% >		4,415	>		4.5	% >		6.377	>		6.5	%
Tier I capital (to average assets)		11,357		8.2	% >		5,568	>		4.0	% >		6,960	>		5.0	%

As a state-chartered savings bank, the Bank is required to maintain a minimum net worth ratio. The Bank’s actual and required net worth ratios are as follows:

	Actual Net Worth					Required Net Worth
	Amount		Ratio			Amount		Ratio
June 30, 2016	$	12,542		9.2	%	$	8,291		6.0	%
December 31, 2016	$	12,566		8.7	%	$	8,644		6.0	%
September 30, 2015		12,277		9.2			8,012		6.0
September 30, 2016		12,587		9.0	%		8,430		6.0	%

Note 7

Fair Value Measurements

Accounting standards describe three levels of inputs that may be used to measure fair value (the fair value hierarchy). The level of an asset or liability within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement of that asset or liability.

Following is a brief description of each level of the fair value hierarchy:

Level 1 - Fair value measurement is based on quoted prices for identical assets or liabilities in active markets.

Level 2 - Fair value measurement is based on: (1) quoted prices for similar assets or liabilities in active markets; (2) quoted prices for identical or similar assets or liabilities in markets that are not active; or (3) valuation models and methodologies for which all significant assumptions are or can be corroborated by observable market data.

Level 3 - Fair value measurement is based on valuation models and methodologies that incorporate at least one significant assumption that cannot be corroborated by observable market data. Level 3 measurements reflect the Company’s estimates about assumptions market participants would use in measuring fair value of the asset or liability.

Some assets and liabilities, such as securities available for sale, are measured at fair value on a recurring basis under accounting principles generally accepted in the United States. Other assets and liabilities, such as impaired loans, may be measured at fair value on a nonrecurring basis.

Following is a description of the valuation methodology used for each asset measured at fair value on a recurring or nonrecurring basis, as well as the classification of the asset within the fair value hierarchy.

Securities available for sale - Securities available for sale may be classified as Level 1 or Level 2 measurements within the fair value hierarchy. Level 1 securities include equity securities traded on a national exchange. The fair value measurement of a Level 1 security is based on the quoted price of the security. Level 2 securities include U.S. government and agency securities, obligations of states and political subdivisions, corporate debt securities, and mortgage-related securities. The fair value measurement of a Level 2 security is obtained from an independent pricing service and is based on recent sales of similar securities and other observable market data.

Loans - Loans are not measured at fair value on a recurring basis. However, loans considered to be impaired may be measured at fair value on a nonrecurring basis. The fair value measurement of an impaired loan that is collateral dependent is based on the fair value of the underlying collateral. All other impaired loan measurements are based on the present value of expected future cash flows discounted at the applicable effective interest rate and, thus, are not fair value measurements. Fair value measurements of underlying collateral that utilize observable market data, such as independent appraisals reflecting recent comparable sales, are considered Level 2 measurements. Other fair value measurements that incorporate estimated assumptions market participants would use to measure fair value are considered Level 3 measurements.

Foreclosed assets - Real estate and other property acquired through or in lieu of loan foreclosure are not measured at fair value on a recurring basis. However, foreclosed assets are initially measured at fair value (less estimated costs to sell) when they are acquired and may also be measured at fair value (less estimated costs to sell) if they become subsequently impaired. The fair value measurement for each asset may be obtained from an independent firm or prepared internally. Fair value measurements obtained from independent firms are generally based on sales of comparable assets and other observable market data and are considered Level 2 measurements. Fair value measurements prepared internally are based on observable market data but include significant unobservable data and are therefore considered Level 3 measurements.

~~Information~~Loans ~~regarding~~- ~~the~~Loans are not measured at fair value ofon ~~assets~~a recurring basis. However, loans considered to be impaired may be measured at fair value on a ~~recurring~~nonrecurring basis. asThe fair value measurement of ~~June~~an ~~30,~~impaired ~~2016~~loan that is collateral dependent is based on the fair value of the underlying collateral. All other impaired loan measurements are based on the present value of expected future cash flows discounted at the applicable effective interest rate and, ~~September 30~~thus, ~~2015~~are ~~follows:~~not fair value measurements. Fair value measurements of underlying collateral that utilize observable market data, such as independent appraisals reflecting recent comparable sales, are considered Level 2 measurements. Other fair value measurements that incorporate estimated assumptions market participants would use to measure fair value are considered Level 3 measurements.

			Recurring Fair Value Measurements Using
	AssetsMeasured atFair Value		Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantUnobservableInputs(Level 3)
June 30, 2016
Assets - Securities available for sale	$	1,208	$	—	$	1,208	$	—
September 30, 2015
Assets - Securities available for sale	$	2,765	$	—	$	2,765	$	—

Information regarding the fair value of assets measured at fair value on a recurring basis as of December 31, 2016 and September 30, 2016 follows:

Information regarding the fair value of assets measured at fair value on a nonrecurring basis as of June 30, 2016 and September 30, 2015 follows:

			Recurring Fair Value Measurements Using
	Assets Measured at Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2016
Assets - Securities available for sale	$	1,051	$	—	$	1,051	$	—

September 30, 2016
Assets - Securities available for sale	$	1,119	$	—	$	1,119	$	—

			Nonrecurring Fair Value Measurements Using
	AssetsMeasured atFair Value		Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantUnobservableInputs(Level 3)
June 30, 2016
Loans	$	288	$	—	$	—	$	288
Totals	$	288	$	—	$	—	$	288
September 30, 2015
Loans	$	431	$	—	$	—	$	431
Foreclosed assets		260		—		—		260
Totals	$	691	$	—	$	—	$	691

Information regarding the fair value of assets measured at fair value on a nonrecurring basis as of December 31, 2016 and September 30, 2016 follows:

Loans with a carrying amount of $480 and $607 were considered impaired and were written down to their estimated fair value of $288 and $431 as of June 30, 2016 and September 30, 2015, respectively. As a result, the Company recognized a specific valuation allowance against these impaired loans totaling $192 and $176 during the nine months ended June 30, 2016 and the year ended September 30, 2015, respectively. The loans were valued based on the value of the underlying collateral, adjusted for selling costs. The fair value of collateral is determined based on appraisals, broker price opinions, or automated valuation models. In some cases, adjustments were made to these values due to various factors including age of the appraisal, age of the comparable and other known changes in the market and in the collateral. When significant adjustments were based on unobservable inputs, the resulting fair value measurement has been categorized as a Level 3 measurement.

			Nonrecurring Fair Value Measurements Using
	Assets Measured at Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2016
Loans	$	1,114	$	—	$	—	$	1,114
Totals	$	1,114	$	—	$	—	$	1,114

September 30, 2016
Loans	$	1,129	$	—	$	—	$	1,129
Totals	$	1,129	$	—	$	—	$	1,129

AtLoans with a carrying amount of $1,401 and $1,492 were considered impaired and were written down to their estimated fair value of $1,114 and 1,129 as of December 31, 2016 and September 30, ~~2015~~2016, ~~foreclosed~~respectively. ~~assets~~As ~~with~~a result, the Company recognized a ~~fair~~specific ~~value~~valuation ~~less~~allowance ~~estimated~~against ~~costs~~these toimpaired ~~sell~~loans oftotaling $~~260~~287 and $363 during the three months ended December 31, 2016 and the year ended September 30, 2016, respectively. The loans were ~~acquired~~valued ~~through~~based oron inthe ~~lieu~~value of ~~foreclosure~~the underlying collateral, adjusted for selling costs. The fair value of ~~foreclosed~~collateral ~~assets~~ is determined based on appraisals, broker price opinions, or automated valuation models. In some cases, adjustments were made to these values due to various factors including age of the appraisal, age of the comparable and other known changes in the market and in the collateral. When significant adjustments were based on unobservable inputs, the resulting fair value measurement has been categorized as a Level 3 measurement.

At December 31, 2016 and September 30, 2016 the Company had no foreclosed assets.

The Company estimates fair value of all financial instruments regardless of whether such instruments are measured at fair value. The following methods and assumptions were used by the Company to estimate fair value of financial instruments not previously discussed.

Cash and cash equivalents - Fair value approximates the carrying value.

Other interest-bearing deposits - Fair value is estimated using discounted cash flow analyses based on current rates for similar types of deposits.

Securities held to maturity - Fair value is based on quoted market prices where available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans held for sale - Fair value is based on commitments on hand from investors or prevailing market prices.

Loans - Fair value of variable rate loans that reprice frequently is based on carrying values. Fair value of other loans is estimated by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings. Fair value of impaired and other nonperforming loans is estimated using discounted expected future cash flows or the fair value of underlying collateral, if applicable.

Federal Home Loan Bank stock - Fair value is the redeemable (carrying) value based on the redemption provisions of the Federal Home Loan Bank.

Accrued interest receivable and payable - Fair value approximates the carrying value.

Cash value of life insurance - Fair value is based on reported values of the assets.

Deposits and advance payments by borrowers for taxes and insurance - Fair value of deposits with no stated maturity, such as demand deposits, savings, and money market accounts, including advance payments by borrowers for taxes and insurance, by definition, is the amount payable on demand on the reporting date. Fair value of fixed rate time deposits is estimated using discounted cash flows applying interest rates currently being offered on similar time deposits.

Federal funds purchased - Fair value approximates carrying value.

Borrowed funds - Fair value of fixed rate, fixed term borrowings is estimated by discounting future cash flows using the current rates at which similar borrowings would be made. Fair value of borrowings with variable rates or maturing within 90 days approximates the carrying value of these borrowings.

Off-balance-sheet instruments - Fair value is based on quoted market prices of similar financial instruments where available. If a quoted market price is not available, fair value is based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreement and the counterparty’s credit standing. Since the estimated fair value of off-balance-sheet instruments is not material, no amounts are presented in the following schedule.

The carrying value and estimated fair value of financial instruments at ~~June 30~~December 31, 2016 and September 30, ~~2015~~2016 follow:

	June 30, 2016
	December 31, 2016
			Fair Value
	CarryingValue		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	52,~~622~~744	$	52,~~622~~744	$	—	$	—
Other interest-bearing deposits		35,~~627~~370		—		—		35,~~630~~322
Securities available for sale		1,~~208~~051		—		1,~~208~~051		—
Securities held to maturity		2,~~478~~182		—		2,~~555~~186		—
Loans held for sale		~~201~~1,756		—		~~201~~1,756		—
Loans		~~114~~120,~~891~~895		—		—		~~114~~121,~~353~~110
Accrued interest receivable		~~418~~422		~~418~~422		—		—
Cash value of life insurance		3,~~371~~412		—		—		3,~~371~~412
Federal Home Loan Bank stock		646		—		—		646
Financial liabilities:
Deposits	$	~~111~~114,~~079~~151	$	7881,~~657~~034	$	—	$	3233,~~473~~145
Advance payments by borrowers for taxes and insurance		~~522~~129		~~522~~129		—		—
Federal funds purchased		~~895~~659		~~895~~659		—		—
Borrowed funds		1215,~~317~~228		—		—		1215,~~798~~446
Accrued interest payable		59		59		—		—

	September 30, 2015
	September 30, 2016
			Fair Value
	CarryingValue		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	23,~~533~~165	$	23,~~533~~165	$	—	$	—
Other interest-bearing deposits		5,~~011~~327		—		—		5,~~037~~369
Securities available for sale		21,~~765~~119		—		21,~~765~~119		—
Securities held to maturity		2,~~870~~340		—		2,~~933~~411		—
Loans held for sale		~~151~~1,721		—		~~151~~1,721		—
Loans		~~109~~116,~~860~~674		—		—		~~108~~117,~~713~~129
Accrued interest receivable		~~395~~421		~~395~~421		—		—
Cash value of life insurance		3,~~316~~392		—		—		3,~~316~~392
Federal Home Loan Bank stock		646		—		—		646
Financial liabilities:
Deposits	$	~~105~~112,~~720~~558	$	7379,~~160~~944	$	—	$	32,~~787~~933
Advance payments by borrowers for taxes and insurance		~~793~~809		~~793~~809		—		—
Federal funds purchased		~~616~~1,330		~~616~~1,330		—		—
Borrowed funds		1312,~~005~~223		—		—		1312,~~475~~626
Accrued interest payable		5559		5559		—		—

Limitations - The fair value of a financial instrument is the current amount that would be exchanged between market participants, other than in a forced liquidation. Fair value is best determined based on quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Consequently, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters that could affect the estimates. Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business. Deposits with no stated maturities are defined as having a fair value equivalent to the amount payable on demand. This prohibits adjusting fair value derived from retaining those deposits for an expected future period of time. This component, commonly referred to as a deposit base intangible, is neither considered in the above amounts, nor is it recorded as an intangible asset on the consolidated balance sheets. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

Note 8

Employee Stock Ownership Plan

The Company maintains a leveraged employee stock ownership plan (“ESOP”) that covers substantially all employees. The ESOP was established in conjunction with the Company’s stock offering completed in April 2014. The loan to fund the acquisition of stock by the ESOP was made by the Company. The Bank makes annual contributions to the ESOP equal to the ESOP’s debt service. The ESOP shares initially were pledged as collateral for this debt. As the debt is repaid, shares are released from collateral and allocated to active participants, based on the proportion of debt service paid in the year. Because the debt is intercompany, it is eliminated in consolidation for presentation in these financial statements. The shares pledged as collateral are reported as unearned ESOP shares in the balance sheet.

As shares are committed to be released from collateral and allocated to active participants, the Company reports compensation expense equal to the current market price of the shares and the shares will become outstanding for earnings-per-shares (EPS) computations. During the ~~nine~~three months ended ~~June~~December 3031, 2016, 2719 shares,~~158~~ with an average fair value of $10.53 per share, were committed to be released resulting in ESOP compensation expense of $7 for the three months ended December 31, 2016. During the three months ended December 31, 2015, 719 shares, with an average fair value of $87.9893 per share, were committed to be released resulting in ESOP compensation expense of $196 for the ~~nine~~three months ended ~~June~~December 3031, ~~2016~~2015. The ESOP shares as of ~~June~~December 3031, 2016 and September 30, ~~2015~~2016 were as follows:

	June 30,2016		September 30,2015
	December 31,2016		September 30,2016
Allocated shares		5,755		25,~~877~~755
Shares committed to be released and allocated to participants		12,~~438~~877		2,158
Total unallocated shares		6463,~~742~~303		6664,~~900~~022
Total ESOP shares		71,935		71,935

Note 9

Subsequent Events

Management has reviewed operations for potential disclosure of information or financial statement impacts related to events occurring after ~~June~~December 3031, 2016 but prior to the release of these financial statements.

Based on the results of this review, no additional subsequent events disclosures or financial statement impacts to the recently completed quarter are required as of the release date.

Home Bancorp Wisconsin, Inc. and Subsidiary

Form 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar meaning. These forward-looking statements include, but are not limited to:

•

statements of our goals, intentions and expectations;

•

statements regarding our business plans, prospects, growth and operating strategies;

•

statements regarding the quality of our loan and investment portfolios; and

•

estimates of our risks and future costs and benefits.

These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements in this report:

•

our ability to execute on our business strategy to increase our origination of multi-family residential loans, one- to four-family investment property loans, commercial real estate loans and home equity loans and lines of credit;

•

general economic conditions, either nationally or in our market areas, that are worse than expected;

•

competition among depository and other financial institutions;

•

inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments;

•

adverse changes in the securities markets;

•

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

•

our ability to enter new markets successfully and capitalize on growth opportunities;

•

our ability to successfully integrate de novo or acquired branches or acquired financial institutions, if any;

•

changes in consumer spending, borrowing and savings habits;

•

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board;

•

changes in our organization, compensation and benefit plans; and

•

changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and other risks and uncertainties, including those discussed in our Annual Report on Form 10-K under the heading “Risk Factors,” our actual future results may be materially different from the results indicated by the forward-looking statements in this report, and you should not place undue reliance on such statements.

Critical Accounting Policies

We consider accounting policies involving significant judgments and assumptions by management that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. The following represent our critical accounting policies:

Allowance for Loan Losses. The allowance for loan losses is the estimated amount considered necessary to cover inherent, but unconfirmed, credit losses in the loan portfolio at the balance sheet date. The allowance is established through the provision for losses on loans which is charged against income. In determining the allowance for loan losses, management makes significant estimates and has identified this policy as one of our most critical accounting policies.

Management performs a quarterly evaluation of the allowance for loan losses. Consideration is given to a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change.

The analysis has two components, specific and general allocations. Specific percentage allocations can be made for unconfirmed losses related to loans that are determined to be impaired. Impairment is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses. If the fair value of the loan is less than the loan’s carrying value, a charge is recorded for the difference. The general allocation is determined by segregating the remaining loans by type of loan, risk weighting (if applicable) and payment history. Loan types are segregated into 1-4 family residential real estate, multifamily real estate, commercial real estate, real estate construction, home equity loans and lines of credit, commercial business, and consumer. We also analyze historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations. This analysis establishes factors that are applied to the loan groups to determine the amount of the general reserve. Actual loan losses may be significantly more than the allowances we have established which could result in a material negative effect on our financial results.

Securities Valuation and Impairment. We classify our investments in debt and equity securities as either held-to-maturity or available-for-sale. Securities classified as held-to maturity are recorded at cost or amortized cost. Available-for-sale securities are carried at fair value. We obtain our fair values from a third party service. This service’s fair value calculations are based on quoted market prices when such prices are available. If quoted market prices are not available, estimates of fair value are computed using a variety of techniques, including extrapolation from the quoted prices of similar instruments or recent trades for thinly traded securities, fundamental analysis, or through obtaining purchase quotes. Due to the subjective nature of the valuation process, it is possible that the actual fair values of these investments could differ from the estimated amounts, thereby affecting our financial position, results of operations and cash flows. If the estimated value of investments is less than the cost or amortized cost, we evaluate whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. If such an event or change has occurred and we determine that the impairment is other-than-temporary, we expense the impairment of the investment in the period in which the event or change occurred. We also consider how long a security has been in a loss position in determining if it is other than temporarily impaired. Management also assesses the nature of the unrealized losses taking into consideration factors such as changes in risk-free interest rates, general credit spread widening, market supply and demand, creditworthiness of the issuer, and quality of the underlying collateral. At ~~June~~December 31, 2016 and September 30, 2016, 100%, of our securities were issued by the U.S. government, U.S. government agencies or U.S. government-sponsored enterprises.

Foreclosed Assets. Assets acquired through or in lieu of loan foreclosure are held for sale and are initially recorded at fair value at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management, and the assets are carried at the lower of carrying amount or fair value less cost to sell and are included in other assets. Revenue and expenses from operations and changes in the valuation allowance are included in net expenses from foreclosed assets.

Income Taxes and Accounting for Valuation Allowance on Deferred Tax Asset. We determine deferred tax assets and liabilities using the liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the current enacted tax rates that will be in effect when these differences are expected to reverse. Provision (credit) for deferred taxes is the result of changes in the deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax asset will not be realized. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets.

A valuation allowance is needed when, based on the weight of the available evidence, it is more likely than not that some portion of the deferred tax asset will not be realized. As required by generally accepted accounting principles, available evidence is weighted heavily on cumulative losses with less weight placed on future projected profitability. We assessed our operating ~~results~~losses during fiscal 2008 through ~~June~~2011, 302013, ~~2016~~2014 and 2015, estimated future operating results, tax planning strategies and the timing of reversals of temporary differences. At September 30, 2013, 2014, 2015, and ~~again~~2016 atand ~~June~~December 3031, 2016, we determined that it is more likely than not that the deferred tax asset may not be realized. Accordingly, a valuation allowance has been established for the entire amount of our deferred tax asset at September 30, 2013, 2014, 2015 and 2016 and December 31, 2016. Realization of the deferred tax asset is dependent on whether there will be sufficient future taxable income of the appropriate character in the period during which deductible temporary differences reverse or within the carryforward periods available under tax law.

Overview

For the three months ended June 30, 2016, we had net income of $20,000, a $314,000 improvement from the $294,000 net loss for the three months ended June 30, 2015. Operating results improved in net interest income, provision for loan loss, noninterest income, and noninterest expense. Net interest income increased by $47,000 for the quarter ended June 30, 2016, compared to the quarter ended June 30, 2015, primarily due to loan growth. The provision for loan losses decreased by $25,000 for the quarter ended June 30, 2016 compared to the quarter ended June 30, 2015, as credit quality continued to improve. Noninterest income increased $91,000 and noninterest expense decreased by $151,000 for the quarter ended June 30, 2016 compared to the quarter ended June 30, 2015.

~~Total~~Overview assets increased $4.7 million, or 3.5%, to $138.2 million at June 30, 2016 from $133.5 million at September 30, 2015. Loans, net increased $5.0 million, or 4.6%, to $114.9 million and cash and due from banks increased $3.1 million, or 122.0%, to $5.6 million. The Company had no foreclosed assets at June 30, 2016.

~~Total~~For ~~deposits~~the ~~increased~~three months ended December 31, 2016, we had net income of $511,000, a $41,000 decreased from $52,000 net income for the quarter ended December 31, 2015.4 ~~million~~While operating results improved in net interest income and provision for loan loss, orthese 5improvements were more than offset by a decrease in noninterest income and an increase noninterest expense.1% Net interest income increased by $67,000 for the quarter ended December 31, 2016, compared to ~~$111~~the quarter ended December 31, 2015.1 ~~million~~In ataddition, ~~June~~the 30provision for loan losses decreased by $5,000 for the quarter ended December 31, 2016 ~~from~~compared ~~$105~~to the quarter ended December 31, 2015, as credit quality continued to improve.7 ~~million~~Noninterest atincome ~~September~~decreased 30$34,000 and noninterest expense increased by $79,000 for the quarter ended December 31, 2016 compared to the quarter ended December 31, 2015.

~~Based~~Total onassets ~~the~~increased ~~above~~$3.6 ~~and~~million, ~~the~~or ~~growth~~2.5%, ~~achieved~~ to ~~date,~~$144.1 wemillion ~~anticipate~~at ~~additional~~December ~~growth~~31, ~~and~~2016 ~~net~~from ~~income~~$140.5 ~~pursuant~~million toat ~~our~~September ~~business~~30, ~~plan~~2016. ~~Assuming~~Loans, ~~the~~net ~~successful~~increased ~~execution~~$4.2 ofmillion, ~~our~~or ~~business plan~~3.6%, ~~we anticipate that we will continue~~ to be$120.9 ~~profitable~~million inwhile ~~upcoming~~cash ~~quarters.~~and ~~There~~due ~~are~~from nobanks ~~assurances,~~decreased ~~however~~$413,000, ~~that~~or we14.8%, ~~will~~to ~~successfully~~$2.4 ~~execute~~million. ~~our~~The ~~business~~Company ~~plan~~had ~~and~~no beforeclosed ~~able~~assets toat ~~continue~~December ~~achieving~~31, ~~profitable results~~2016.

~~Comparison~~Our results of ~~Financial~~operations ~~Condition~~may atbe ~~June~~negatively 30impacted if we are unable to increase our net interest income and noninterest income relative to our noninterest expenses. Although we have focused on reducing the growth of our noninterest expenses, ~~2016~~we do not believe that we can materially reduce such expenses in the current environment without impairing our customer service, competitiveness and ~~September 30~~our ability to maintain regulatory compliance. As a result, ~~2015~~to improve our results of operations we have adopted a plan to grow our earnings base, especially the size of our loan portfolio, while reducing our noninterest expenses to the extent feasible. Although the capital raised in the nutual-to-stock conversion in 2014 supports this effort, the conversion has also increased expenses due to ongoing expenses related to being a public company. These additional expenses include costs related to becoming a public company, increased compensation expenses associated with our employee stock ownership plan and the possible implementation of one or more stock-based benefit plans after the completion of the conversion.

~~Total~~Based ~~assets~~on ~~increased~~the ~~$4.7~~above ~~million~~and the growth achieved in 2015 and 2016, orwe ~~3.5%~~anticipate increased net income if we continue to ~~$138.2~~experience ~~million~~additional atgrowth ~~June~~in ~~30,~~our ~~2016~~earnings ~~from~~base ~~$133.5~~pursuant ~~million~~to atour ~~September 30,~~business ~~2015~~plan. ~~Net~~Assuming ~~loans~~the ~~increased~~successful byimplementation ~~$5.0~~of ~~million,~~our ~~cash~~business ~~and~~plan, ~~cash~~we ~~equivalents~~expect ~~increased~~that bywe ~~$3.1~~will ~~million,~~continue ~~and~~to ~~loans~~be ~~held~~profitable. ~~for~~There ~~sale~~can ~~increased~~be byno ~~$50~~assurances,~~000~~ however, asthat ~~investments~~we ~~decreased~~will ~~$2.9~~successfully ~~million~~execute on our business plan and ~~other~~be ~~interest-earning~~able ~~deposits~~to ~~decreased~~continue ~~$1.4~~to ~~million~~maintain profitability quarterly.

~~Cash~~Comparison ~~and~~of ~~cash~~Financial ~~equivalents~~Condition ~~increased~~at ~~$3.1 million~~December 31, or2016 ~~122.0%,~~and ~~to $5.6 million at June~~ September 30, 2016.

~~Other~~Total ~~interest-bearing~~assets ~~deposits~~increased ~~in other financial institutions decreased~~ $13.46 million, or 272.65%, to $3144.61 million at ~~June~~December 31, 2016 from $140.55 million at September 30, 2016. Net loans increased by $4.2 million and loans held for sale increased by $35,000, as total investment securities decreased by $227,000 and cash and cash equivalents decreased by $421,000.

~~Net~~Cash ~~loans,~~and ~~excluding~~cash ~~loans~~equivalents ~~held~~decreased ~~for sale, increased by~~ $~~5.0 million~~421,000, or 413.63%, to $~~114~~2.97 million at ~~June~~December 3031, 2016 ~~from $109~~.9 million at September 30, 2015. The increase in net loans during the nine months ended June 30, 2016 was primarily the result of a $4.3 million increase in multifamily real estate loans and a $2.1 million increase in one- to four-family residential mortgage loans, partially offset by a $1.1 million decrease in construction loans, and a $273,000 decrease in second mortgage loans on residential real estate.

~~Loans~~Net loans, excluding loans held for sale, increased by $504.2 million,~~000,~~ or 333.16%, to $~~201~~120.9 million at December 31,~~000~~ 2016 from $~~151,000~~116.7 million at September 30, ~~2015~~2016. The increase in net loans ~~held~~during ~~for~~the ~~sale~~three ~~represents~~months ended December 31, 2016 was primarily the ~~timing~~result of ~~loan~~a ~~originations~~$2.6 million increase in multifamily real estate loans, a $1.2 million increase in one- to four-family residential mortgage loans, and ~~loan~~a ~~sales~~$352,000 increase in construction loans..

~~Total~~Loans ~~investment~~held ~~securities~~for ~~decreased~~sale ~~$1.9~~increased ~~million~~$35,000, or 342.60%, to $31.8 million from $1.7 million at ~~June~~ September 30, 2016. The ~~decrease~~increase in ~~investment~~loans ~~securities~~held ~~was from calls, sales, and principal payments on mortgage-backed securities. Securities available~~ for sale ~~decreased~~represents ~~$1.6~~the ~~million,~~timing ~~while~~of ~~securities~~loan ~~held~~originations toand ~~maturity~~loan ~~decreased by $392,000~~sales.

~~Our~~Total investment insecurities ~~bank-owned~~decreased ~~life insurance increased~~ $55226,000, or 6.5%, to $3.42 million ~~during~~at ~~the nine months ended June 30~~December 31, 2016. WeSecurities ~~invest~~available ~~in bank-owned life insurance to provide us with a funding offset~~ for ~~our~~sale ~~benefit~~decreased ~~plan~~$69,000, ~~obligations.~~while ~~Bank-owned~~securities ~~life~~held ~~insurance also generally provides us noninterest income that is non-taxable. Federal regulations generally limit our investment in bank-owned life insurance~~ to ~~25%~~maturity ofdecreased ~~our~~by ~~Tier 1 capital plus our allowance for loan losses~~$158,000.

~~Foreclosed~~Our ~~assets~~investment ~~decreased~~in bank-owned life insurance increased $~~260~~20,000 to $03.4 atmillion ~~June~~during 30the three months ended December 31, 2016. We invest in bank-owned life insurance to provide us with a funding offset for our benefit plan obligations. Bank-owned life insurance also generally provides us noninterest income that is non-taxable. Federal regulations generally limit our investment in bank-owned life insurance to 25% of our Tier 1 capital plus our allowance for loan losses.

~~Total~~Foreclosed ~~deposits~~assets ~~increased~~remained ~~$5.4 million, or 5.1%, to $111.1 million~~ at ~~June 30, 2016 from~~ $~~105.7~~0 ~~million~~ at ~~September~~December 3031, 2015. As part of our strategic plan we continued our efforts to increase core deposits, which we consider to be all deposits except brokered deposits. Demand deposits increased $3.5 million, or 11.6%, and money market and savings deposits increased $2.0 million, or 4.7%, while time deposits decreased $138,000, during the nine months ended June 30, 2016.

~~Advance~~Total ~~payments~~deposits byincreased ~~borrowers~~$1.6 ~~for~~million, ~~taxes~~or ~~and~~1.4%, ~~insurance~~to ~~decreased~~$114.2 million at December 31, 2016 from $~~271~~112.6 million at September 30, 2016. As part of our strategic plan we continued our efforts to increase core deposits, which we consider to be all deposits except brokered deposits. Demand deposits increased $856,000, or ~~34.~~2.5%, toand money market and savings deposits increased $~~522~~234,000, asor ~~many~~0.5%, ofwhile ~~these~~time ~~balances~~deposits ~~were~~increased ~~used~~$503,000, toduring ~~pay~~the ~~2015~~three ~~property~~months ~~taxes~~ended December 31, 2016.

Our borrowings consist predominantly of Federal Home Loan Bank of Chicago advances and federal funds purchased. Federal Home Loan Bank advances decreased by $688,000, or 5.3%, to $12.3 million at June 30, 2016. Overnight federal funds purchased increased $279,000 to $895,000 at June 30, 2016.

Other liabilities decreased $153,000, or 12.3%, to $1.1 million at June 30, 2016.

Total equity increased $128,000, or 1.1%, to $12.3 million at June 30, 2016 from $12.1 million at September 30, 2015. The increase was primarily due to the $135,000 net income for the nine months ended June 30, 2016. Total equity was also impacted by the recognition of $19,000 from the allocation of ESOP shares and a $26,000 decrease in accumulated other comprehensive income.

~~Comparison~~Advance ofpayments ~~Results~~by ofborrowers ~~Operations~~ for ~~the~~taxes ~~three~~and ~~months~~insurance ~~ended~~decreased ~~June~~$680,000, 30or 84.1%, as many of such balances were used to pay 2016 ~~and~~property ~~2015~~taxes.

~~General.~~Our Weborrowings ~~recorded~~consist ~~net~~predominantly ~~income~~ of ~~$20,000~~Federal ~~for~~Home ~~the~~Loan ~~three~~Bank ~~months ended June 30, 2016, compared to a net loss~~ of ~~$294,000~~Chicago ~~for the three months ended June 30, 2015~~advances. ~~Operating~~Federal ~~results~~Home ~~improved~~Loan asBank aadvances ~~result of improvements in net interest income, provision for loan loss, noninterest income, and noninterest expense. Net interest income~~ increased by $473.0 million,~~000~~ ~~for~~or ~~the quarter ended June 30~~24.6%, ~~2016, compared~~ to ~~the~~$15.2 ~~quarter~~million ~~ended~~at ~~June~~December 3031, ~~2015~~2016. InAt ~~addition~~December 31, ~~the~~2016 ~~provision~~and ~~for loan losses decreased by $25,000 for the quarter ended June~~ September 30, 2016 ~~compared to the quarter ended June 30~~, ~~2015,~~we ashad ~~credit quality continued to improve. Noninterest income increased~~ $91659,000 and ~~noninterest expense decreased by~~ $~~151,000~~1.3 ~~for~~million ~~the~~of ~~quarter~~overnight ~~ended~~federal ~~June 30~~funds, ~~2016 compared to the quarter ended June 30, 2015~~respectively.

~~Net~~Other ~~Interest~~liabilities ~~Income. Net interest income~~ increased $47311,000, or 425.83%, to $1.05 million ~~for~~on ~~the three months ended June 30~~December 31, 2016 ~~from $986,000 for the three months ended June 30, 2015~~. The increase in net interest income resulted from an increase of $84,000 in interest and dividend income partially offset by an increase of $37,000 in interest expense. The interest income increase was due to growth of $8.8 million in average total interest-bearing assets and the average yield on such assets remained 3.79%. The increase in interest expense was due to a $6.2 million increase in interest bearing liabilities and a 0.10% increase in the cost of such liabilities to 0.57%.

~~Interest~~Total ~~and~~equity ~~Dividend Income. Interest and dividend income~~ increased $8414,000, or 70.51%, to $112.24 million ~~for~~at ~~the~~December 31, ~~three~~2016 ~~months~~from ~~ended~~$12.4 ~~June~~million at September 30, 2016. ~~from~~The increase was primarily due to the $~~1.1~~11,000 ~~million~~net income for the three months ended ~~June 30~~December 31, ~~2015~~2016. ~~The~~Total ~~increase~~equity ~~resulted~~was ~~from~~also aimpacted ~~$130,000~~by ~~increase~~the inrecognition ~~interest~~of ~~income~~earned onESOP ~~loans~~of ~~partially~~$7,000 ~~offset~~and by a $464,000 decrease in ~~interest~~accumulated ~~and~~other ~~dividend~~comprehensive income ~~on interest-bearing deposits and securities~~.

~~Interest~~Comparison ~~income~~of onResults ~~loans~~of ~~increased~~Operations ~~$130,000, or 12.5%, to $1.2 million~~ for the ~~quarter~~three months ended ~~June 30~~December 31, 2016 ~~from $1.0 million for the quarter ended June 30, 2015. This increase resulted from a $15.0 million increase in the average balance of loans to $115.4 million~~ and ~~a 9 basis point decrease in the average yield on loans to 4.06% for the quarter ended June 30, 2016 from 4.15% for the quarter ended June 30,~~ 2015.

~~Interest~~General. ~~income~~We onrecorded ~~interest-bearing~~net ~~deposits~~income ~~decreased~~of $3011,000, orfor ~~100.0%~~the three months ended December 31, 2016, compared to net income of $052,000 for the three ~~month~~months ~~period~~ ended ~~June~~December 31, 302015. Operating results improved in net interest income and provision for loan loss, however, these improvements were more than offset by a decrease in noninterest income and an increase noninterest expense. Net interest income increased by $67,000 for the quarter ended December 31, 2016, ~~from~~compared to the quarter ended December 31, 2015. In addition, the provision for loan losses decreased by $305,000 for the ~~three~~quarter ~~month~~ended ~~period~~December 31, 2016 compared to the quarter ended ~~June~~December 3031, 2015, as credit quality continued to improve. Noninterest income decreased $34,000 and noninterest expense increased by $79,000 for the first quarter of fiscal 2017 compared to the first quarter of fiscal 2016.

Net Interest ~~and~~Income. ~~dividend~~Net interest income onincreased ~~investment securities decreased by~~ $1667,000 ~~to $24~~,~~000,~~ or 406.04%, to $1.1 million for the ~~quarter~~three months ended ~~June 30~~December 31, 2016 from $~~40,000~~1.0 million for the ~~quarter~~three months ended ~~June 30~~December 31, 2015. The ~~decrease~~increase ~~was~~in ~~due~~net tointerest aincome ~~$3.8~~resulted ~~million~~from ~~decrease~~an inincrease ~~the average balance~~ of ~~investment securities to~~ $~~5.1~~81,000 ~~million~~in ~~for~~interest ~~the~~and ~~quarter~~dividend ~~ended~~income ~~June~~partially ~~30,~~offset ~~2016~~by ~~and~~an aincrease 7of ~~basis~~$14,000 ~~point increase~~ in ~~the~~interest ~~average yield on investment securities to 1~~expense.~~87%.~~

Interest ~~Expense~~and Dividend Income. Interest ~~expense, consisting of interest-bearing deposits~~ and ~~borrowings,~~dividend income increased by $3781,000, or 296.17%, to $~~164,000~~1.3 million for the ~~quarter~~three months ended ~~June 30~~December 31, 2016 from $~~127,000~~1.2 million for the ~~quarter~~three months ended ~~June 30~~December 31, 2015. The increase ~~was~~resulted ~~due~~from to a $2098,000, ~~or 28.6%,~~ increase in ~~the~~interest ~~cost~~income ofon ~~interest-bearing~~loans ~~deposits~~partially ~~and~~offset by a $17,000, ordecrease ~~29.8%, increase~~ in ~~the~~interest ~~cost~~and ofdividend ~~borrowings.~~income Aton ~~June~~interest-bearing ~~30,~~deposits ~~2016, our borrowings consisted of $12.3 million of Federal Home Loan Bank of Chicago advances~~ and ~~$895,000 of federal funds purchased~~securities.

~~The~~Interest income on loans increased $2098,000, ~~increase~~or in8.5%, ~~interest~~to ~~expense~~$1.2 ~~from~~million ~~deposits~~for ~~was~~the ~~largely~~quarter ~~the~~ended ~~result~~December 31, of2016 anfrom $~~18,000~~1.2 ~~increase~~million infor ~~interest~~the ~~expense~~quarter ~~from~~ended ~~certificates~~December 31, ~~of deposit~~2015. ~~The~~This ~~average~~increase ~~balance~~resulted offrom ~~certificates~~a ~~of deposit increased~~ $26.30 million ~~for~~increase in the ~~quarter~~average ~~ended~~balance ~~June~~of ~~30,~~loans ~~2016~~to ~~compared~~$119.2 tomillion ~~the~~and ~~quarter~~a ~~ended~~10 ~~June~~basis ~~30,~~point ~~2015,~~increase ~~and~~in the average ~~cost~~yield ofon ~~such~~loans ~~deposits increased~~ to 4.9612% ~~from .79%~~ for the ~~same~~quarter ~~periods~~ended December 31, ~~respectively~~2016.

~~The~~Interest ~~cost~~income ofon ~~borrowings~~interest-bearing ~~increased~~deposits decreased $177,000, or 2928.80%, to $7418,000 for the ~~quarter~~three ~~ended~~month ~~June~~period 30ended December 31, 2016 from $5725,000 for the ~~quarter~~three ~~ended~~month ~~June~~period 30ended December 31, 2015. ~~The increase was due to a $1.5 million increase in average borrowings and a 0.30% increase in the average cost to 2.37% from 2.07%.~~

~~Provision~~Interest ~~for~~and ~~Loan~~dividend ~~Losses.~~income Weon ~~recorded~~investment asecurities ~~provision~~decreased ~~for~~by ~~loan~~$10,000 ~~losses~~to of $518,000 for the ~~three~~quarter ~~months~~ ended ~~June 30~~December 31, 2016, ~~compared~~from ~~to a provision for loan losses of~~ $3028,000 for the ~~three~~quarter ~~months~~ ended ~~June 30~~December 31, 2015. The decrease ~~in the provision for loan losses~~ was ~~primarily~~ due to a ~~reduction in historical loan losses~~$2.1 Asmillion adecrease ~~result~~in ~~of loan growth~~ the ~~allowance~~average ~~for~~balance ~~loan~~of ~~losses~~investment ~~increased~~securities to $~~5,000~~3.4 inmillion for the ~~three~~quarter ~~months~~ ended ~~June 30~~December 31, 2016 asand ~~the~~an ~~$5,000~~18 ~~provision~~basis ~~for~~point ~~loan~~decrease ~~losses~~in ~~and~~ the ~~$1,000~~average ~~recoveries~~yield on ~~previously~~investment ~~charged~~securities ~~off~~to ~~loans more than offset loan charge offs totaling $~~1~~,000~~.76%.

~~Noninterest~~Interest ~~Income~~Expense. ~~Noninterest~~Interest ~~income~~expense, consisting of interest-bearing deposits and borrowings, increased $9114,000, or 8.8%, to $~~227~~173,000 for the ~~three~~quarter ~~months~~ ended ~~June 30~~December 31, 2016, ~~compared~~from to $~~136~~159,000 for the ~~three~~quarter ~~months~~ ended ~~June 30~~December 31, 2015. The increase was ~~primarily~~ due to a $6412,000, or 14.1%, increase in ~~mortgage~~the ~~banking~~cost ~~income~~of tointerest-bearing deposits and a $842,000, aor ~~$16~~2.7%,~~000~~ increase in ~~service~~the ~~fees~~cost of borrowings. At December 31, ~~and~~2016, aour borrowings consisted of $~~10,000~~15.2 ~~increase~~million inof ~~other~~Federal ~~noninterest~~Home ~~income~~Loan toBank of Chicago advances and $17659,000 of overnight federal funds.

~~Noninterest~~The ~~Expense. Noninterest expense decreased~~ $~~151~~12,000, orincrease ~~10.9%,~~in tointerest ~~$1.2~~expense ~~million~~from ~~for~~interest-bearing ~~the~~deposits ~~three~~was ~~months~~largely ~~ended~~the ~~June~~result ~~30,~~of ~~2016~~a ~~compared~~$10,000 toincrease ~~the~~in ~~three~~interest ~~months~~expense ~~ended~~from ~~June~~certificates ~~30,~~of ~~2015~~deposit. The ~~largest~~average ~~component~~balance ~~decreases~~of ~~were~~certificates ~~foreclosed~~of ~~assets~~deposit ~~expense~~increased ~~which decreased~~ $~~195~~437,000 tofor $0the ~~and~~quarter ~~other~~ended ~~noninterest~~December 31, ~~expense~~2016 ~~which~~compared ~~decreased $17,000~~ to ~~$66,000.~~the ~~These~~quarter ~~decreases~~ended ~~and others were partially offset by increases in professional fees of $25~~December 31,~~000~~ ~~to $76~~2015,~~000,~~ ~~data~~while ~~processing~~the ~~and~~average ~~office~~cost ~~expense~~ of ~~$25,000~~such todeposits ~~$246,000,~~increased ~~and~~to ~~occupancy~~0.99% ~~and~~from ~~equipment~~0.88% ~~expense~~for ofthe ~~$11,000~~same ~~to $186~~periods,~~000~~ respectively.

The cost of borrowings increased $2,000, or 2.7%, to $76,000 for the quarter ended December 31, 2016 from $74,000 for the quarter ended December 31, 2015. The increase was due to a 0.28% increase in average borrowing rates to 2.35%, partially offset by a $1.4 million decrease in average borrowings.

~~Income~~Provision ~~Tax~~for ~~Expense~~Loan Losses. We recorded no ~~income~~provision ~~tax~~for ~~expense~~loan losses for the three months ended ~~June 30~~December 31, 2016, ~~and~~compared to a provision for loan losses of $5,000 for the three months ended December 31, 2015. ~~and~~The ~~maintain~~decrease in the provision for loan losses was primarily due to the payoff of a ~~100%~~loan ~~valuation~~that previously had a specific reserve. The allowance onfor ~~our~~loan ~~deferred~~losses ~~tax~~decreased ~~asset~~$1,000 in the three months ended December 31, 2016 as net loan charge offs totaled $1,000.

~~Comparison~~Noninterest ofIncome. ~~Results~~Noninterest ofincome ~~Operations~~decreased $32,000 to $147,000 for the ~~nine~~three months ended ~~June~~December 31, 302016, compared to $179,000 for the three months ended December 31, 2015. The decrease for the quarter ended December 31, 2016 ~~and~~compared to the quarter ended December 31, 2015 was primarily due to a $31,000 decrease in mortgage banking income, a $3,000 decrease in service fees to $70,000, partially offset by a $1,000 increase in the cash value of life insurance and a $1,000 increase in other income.

~~General~~Noninterest Expense. WeNoninterest ~~recorded~~expense ~~net~~increased ~~income of~~ $~~135~~81,000, or 6.9%, to $1.2 million for the ~~nine~~three months ended ~~June 30~~December 31, 2016, compared to athe ~~net~~three ~~loss~~months ofended December 31, 2015. The largest component increases were compensation which increased $39,000, or 6.8% to $613,000 from $574,000, ~~for~~data ~~the~~processing ~~nine~~and ~~months~~office ~~ended~~expense ~~June~~which 30increased $27,000, ~~2015.~~advertising ~~Net~~and ~~interest~~promotions ~~income~~expense which increased by $~~322~~18,000, ~~noninterest~~professional ~~income~~expenses which increased by $~~133~~11,000, and other noninterest expense ~~decreased~~which byincreased $~~179~~25,000,. ~~and~~These ~~the~~increases ~~provision~~and ~~for~~others ~~loan~~were ~~losses~~partially ~~decreased~~offset by decreases of $7523,000 ~~for~~in ~~the~~foreclosed ~~nine~~assets ~~months~~expense ~~ended~~and ~~June 30~~$15,000 ~~2016.~~in examinations and assessments expense.

~~Net~~Income ~~Interest~~Tax ~~Income~~Expense. ~~Net~~We ~~interest~~recorded no income ~~increased~~tax ~~$322,000,~~benefit or ~~11.3%,~~expense ~~to $3.2 million~~ for the ~~nine~~three months ended ~~June 30~~December 31, 2016 ~~from~~and ~~$2.8 million for the nine months ended June 30,~~ 2015. ~~The increase in net interest income resulted from an increase of $447,000 in interest~~ and ~~dividend~~maintain ~~income,~~a ~~partially~~valuation ~~offset~~allowance byon anour ~~increase~~deferred oftax ~~$125,000 in interest expense~~asset.

Interest and Dividend Income. Interest and dividend income increased $447,000, or 14.0%, to $3.6 million for the nine months ended June 30, 2016 from $3.2 million for the nine months ended June 30, 2015. The increase resulted from a $555,000 increase in interest income on loans, partially offset by a $44,000 decrease in interest income on interest-bearing deposits and a $64,000 decrease in interest and dividends on securities.

Interest income on loans increased $555,000, or 18.7%, to $3.5 million for the nine months ended June 30, 2016 from $3.0 million for the nine months ended June 30, 2015. This increase resulted from a $19.5 million increase in the average balance of loans to $114.8 million, partially offset by a 6 basis point decrease in the average yield on loans to 4.10%.

Interest income on interest-bearing deposits decreased $44,000, or 46.8%, to $50,000 for the nine month period ended June 30, 2016 from $94,000 for the nine month period ended June 30, 2015. The decrease resulted from a $2.5 million decrease in the average balance of interest-bearing deposits to $5.4 million and a 37 basis point decrease in the average yield on such deposits to 1.20%.

Interest and dividend income on investment securities decreased $64,000 to $76,000 for the nine months ended June 30, 2016 from $140,000 for the nine months ended June 30, 2015. The decrease was due to an 11 basis point decrease in the average yield on investment securities to 1.83% and a $4.5 million decrease in the average balance of investment securities to $5.0 million.

Interest Expense. Interest expense, consisting of interest-bearing deposits and borrowings, increased $125,000, or 34.7%, to $485,000 for the nine months ended June 30, 2016 from $360,000 for the nine months ended June 30, 2015. The increase was due to a $61,000, or 30.3%, increase in the cost of interest-bearing deposits and a $64,000, or 40.3%, increase in the cost of borrowings.

The $61,000 increase in interest expense from deposits was the result of a $61,000 increase in interest expense from certificates of deposit. The average balance of certificates of deposit increased $4.8 million for the nine months ended June 30, 2016 compared to the nine months ended June 30, 2015, while the average cost of such deposits increased to .92% from .79% for the same periods, respectively.

The cost of borrowings increased $64,000 for the nine month period ended June 30, 2016, as average borrowings increased $4.0 million, which was partially offset by a decrease in the average cost of such borrowings from 2.17% to 2.16%.

Provision for Loan Losses. We recorded a provision for loan losses of $15,000 for the nine months ended June 30, 2016, compared to a provision for loan losses of $90,000 for the nine months ended June 30, 2015. The decrease in the provision for loan losses was primarily due to a reduction in historical loan losses, partially offset by an increase in the balance of loans. The allowance for loan losses increased $14,000 in the nine months ended June 30, 2016 as the $15,000 provision for loan losses and the $4,000 recoveries on previously charged off loans more than offset loan charge offs totaling $5,000.

Noninterest Income. Noninterest income increased $133,000, or 27.1%, to $624,000 for the nine months ended June 30, 2016, compared to $491,000 for the nine months ended June 30, 2015. The increase was primarily due to a $53,000 increase in mortgage banking income to $168,000, a $42,000 increase in service fees to $205,000, and a $47,000 increase in other noninterest income to $72,000, partially offset by decreases totaling $9,000 in net gain on sale of securities, net gain on sale of premises and equipment, rental income and income from cash value of life insurance.

Noninterest Expense. Noninterest expense decreased $179,000, or 4.7%, to $3.6 million for the nine months ended June 30, 2016 compared to the nine months ended June 30, 2015. The largest component decreases were foreclosed assets, net which decreased $239,000 to $23,000, advertising and promotions which decreased $5,000 to $96,000, examinations and assessments which decreased $5,000 to $93,000, and other noninterest expense which decreased $41,000 to $177,000. These decreases were partially offset by increases of $87,000 in professional fees and $21,000 in data processing and office expense.

Income Tax Expense. We recorded no income tax benefit or expense for the nine months ended June 30, 2016 and 2015 and maintain a 100% valuation allowance on our deferred tax asset.

Liquidity and Capital Resources

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, scheduled amortization and prepayments of loan principal and mortgage-backed securities, maturities and calls of investment securities and funds provided by our operations. In addition, we have the ability to borrow from the Federal Home Loan Bank of Chicago. At ~~June 30~~December 31, 2016, we had $1215.32 million in borrowings from the Federal Home Loan Bank of Chicago. At that same date, we had the capacity to borrow an additional $2523.73 million from the Federal Home Loan Bank of Chicago, subject to our pledging sufficient assets. At ~~June 30~~December 31, 2016, we had no$659,000 in federal funds purchased. We also had the ability to borrow an additional $1.81 million through Bankers Bank’s agent federal funds program. In addition, we have authority to borrow $65.46 million from the Federal Reserve’s “discount window,” but Federal Reserve policy generally requires savings institutions to exhaust all other sources before borrowing from the Federal Reserve.

Loan repayments and maturing securities are a relatively predictable source of funds. However, deposit flows, calls of securities and prepayments of loans and mortgage-backed securities are strongly influenced by interest rates, general and local economic conditions and competition in the marketplace. These factors reduce the predictability of these sources of funds.

Our primary investing activity is the origination of loans. We have also purchased investment securities in executing our business strategy to invest some of our excess liquidity in investment securities. Our loans, net of allowance for loan losses, increased $54.02 million during the ~~nine~~three months ended ~~June 30~~December 31, 2016.

Total deposits increased $51.46 million during the ~~nine~~three months ended ~~June 30~~December 31, 2016. Deposit flows are affected by the level of interest rates, the interest rates and products offered by competitors and other factors. At ~~June 30~~December 31, 2016, certificates of deposit scheduled to mature within one year totaled $14.46 million. Our ability to retain these deposits will be determined in part by the interest rates we are willing to pay on such deposits. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before ~~June~~December 3031, 2017. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained.

We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained.

At ~~June 30~~December 31, 2016, the Bank’s capital levels exceeded the levels required to be considered “well capitalized” under federal regulations.

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make.

Contractual Obligations. In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

As of ~~June 30~~December 31, 2016, there were no material changes in interest rate risk from the analysis disclosed in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on December 2328, ~~2015~~2016. The 25 basis point discount rate change on December 17, 2015 was considered in the interest rate risk analysis disclosed in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on December 23, 2015.

Item 4.

Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of the period covered by this report. Based upon such evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

During the period covered by this report, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Home Savings Bank

Part II — Other Information

Item 1.

Legal Proceedings

The Bank and Company are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Bank’s or the Company’s financial condition or results of operations.

Item 1A.

Risk Factors

InFor ~~addition to the other~~ information ~~contained~~regarding ~~in this Quarterly Report on Form 10-Q,~~ the ~~following~~Company’s risk ~~factor~~factors, ~~represents~~see ~~material~~“Risk ~~updates~~Factors” ~~and~~in ~~additions to~~ the ~~risk~~Company’s ~~factors previously disclosed in our~~ Annual Report on Form 10-K for the ~~fiscal~~ year ended September 30, ~~2015~~2016 as filed with the Securities and Exchange Commission. ~~Additional~~on ~~risks not presently known to us~~December 28, or2015. ~~that~~As ~~we currently deem immaterial, may also adversely affect our business, financial condition or results~~ of ~~operations. Further~~December 31, ~~to the extent that any of the information contained in this Quarterly Report on Form 10-Q constitutes forward-looking statements~~2016, the risk ~~factor set forth below also is a cautionary statement identifying important~~ factors ~~that~~of ~~could~~the ~~cause~~Company ~~our~~have ~~actual~~not ~~results~~changed ~~to differ~~ materially from those ~~expressed~~disclosed in ~~any~~the ~~forward-looking~~Form ~~statements made by or on behalf of us~~10-K.

A new accounting standard may require us to increase our allowance for loan losses and may have a material adverse effect on our financial condition and results of operations.

The Financial Accounting Standards Board has adopted Accounting Standard Update 2016-13, which will be effective for Home Bancorp Wisconsin, Inc. and Home Savings Bank for the first quarter of the fiscal year ending September 30, 2020. This standard, often referred to as “CECL” (reflecting a current expected credit loss model), will require companies to recognize an allowance for credit losses based on estimates of losses expected to be realized over the contractual lives of the loans. Under current U.S. GAAP, companies generally recognize credit losses only when it is probable that a loss has been incurred as of the balance sheet date. This new standard will require us to collect and review increased types and amounts of data for us to determine the appropriate level of the allowance for loan losses, and may require us to increase our allowance for loan losses. Any increase in our allowance for loan losses or expenses incurred to determine the appropriate level of the allowance for loan losses may have a material adverse effect on our financial condition and results of operations. We are currently evaluating the impact of adopting this standard on our consolidated financial statements.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

None.

Item 6.

Exhibits

31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Balance Sheets as of December 31, 2016 and September 30, 2016, (ii) the Statements of Income for the three months ended December 31, 2016 and 2015, (iii) the Statements of Comprehensive Income for the three months ended December 31, 2016 and 2015, (iv) the Statements of Stockholders’ Equity for the three months ended December 31, 2016 and 2015, (v) the Statements of Cash Flows for the three months ended December 31, 2016 and 2015, and (vi) the Notes to the Financial Statements.

~~31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~28

32 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101 Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Balance Sheets as of June 30, 2016 and September 30, 2015, (ii) the Statements of Income for the three and nine months ended June 30, 2016 and 2015, (iii) the Statements of Comprehensive Income (Loss) for the three and nine months ended June 30, 2016 and 2015, (iv) the Statements of Stockholders’ Equity for the nine months ended June 30, 2016 and 2015, (v) the Statements of Cash Flows for the nine months ended June 30, 2016 and 2015, and (vi) the Notes to the Financial Statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		HOME BANCORP WISCONSIN, INC.
Date: August 5, 2016		/s/ James R. Bradley
Date: February 13, 2017		/s/ James R. Bradley
		James R. Bradley
		President and Chief Executive Officer
Date: August 5, 2016		/s/ Mark A. Fritz
Date: February 13, 2017		/s/ Mark A. Fritz
		Mark A. Fritz
		Senior Vice President and Chief Financial Officer

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